Introduction

Coresight Research is a research partner of Shoptalk 2023, which is taking place March 26–29 in Las Vegas, US. Shoptalk is an annual retail conference focusing on the trends, business models and technologies that are shaping the future of retail.

We present key insights from day three of the event.

Shoptalk 2023 Day Three: Coresight Research Insights

Technology: Web3 and the Retail Landscape

Deborah Weinswig, CEO and Founder of Coresight Research, took to the stage at the Globe Theatre for the “Web3 and the Supply Chain: Blockchain, Digital Twins and More” session. There, she presented on how Web3 (sometimes styled Web 3 or Web 3.0) can help brands and retailers across their supply chains. Coresight Research has been involved in supply chains for many years: first as part of the world’s largest supply chain company, Li & Fung, and then as a partner following our spin-out in 2018. We first envisioned a modern, connected supply chain in 2019. Since then, our coverage of the topic has continued, including research on how emerging technologies can help optimize companies’ supply chains.

Weinswig discusses how Web3 can create optimal supply chains
Source: Coresight Research

Retailers face several challenges and limitations in managing their supply chains. Web3 technology can help boost supply chain traceability, transparency, intelligence and automation, helping to mitigate those challenges. As Weinswig explained, there are many benefits to using intelligent, connected supply chains, including:

• Better demand forecasting
• Faster product design and on-demand manufacturing, as well as consumer-to-manufacturer abilities
• Greater traceability, compliance and circularity
• Enhanced labor efficiencies and cost savings
• Increased last-mile speed

During the presentation, Weinswig introduced a framework for adding Web3 to supply chains, allowing companies to add end-to-end visibility, automation and cost savings. With this framework, and through smart contracts and decentralized ledgers, brands and retailers can enjoy a host of benefits, as seen in the image below.

The impacts of Web3 on supply chains
Source: Coresight Research

Weinswig also remarked on what could be holding retailers back from utilizing Web3 in their supply chains, such as their software not being Web3-compatible and the innovator landscape remaining in its infancy. To conclude her presentation, Weinswig provided a look at the Web3-based supply chain solutions available today, showcasing the tools that organizations can use to overcome current hurdles. Coresight Research anticipates that Web3, industrial robots and sophisticated AI-based systems will be critical to the supply chain of the future, helping manage inventory, improve visibility and make deliveries.

Web3 was also discussed at the “Web3 in Retail: Virtual Goods and Immersive Consumer Experiences” session. There, panelists covered many of the ways in which companies can utilize Web3 technology across their value chains. For instance, Michael Relich, Co-CEO of PacSun, dug into the applications of the metaverse for brands and retailers. He urged companies to think about the metaverse not as an online, 3D mall but as a means to engage with younger consumers, especially Gen Zers. While, like many retailers, PacSun has partnered with popular pre-Web3 platform Roblox, Relich stated that the company is also looking into less-utilized channels, such as Discord and Reddit.

In the same session, Carolina Arguelles Navas, Global Head of AR (Augmented Reality) Business Strategy at Snap, explained how the company’s primary app, Snapchat, had “taught the world” how to use AR and how the technology can help companies better connect and engage with consumers. She stated that AR is most used for communication and self-expression; as long as companies focus on those two values, the technology can be a significant asset to marketing and engagement strategies.

Navas from Snap (left) discussing AR technology with Hilary Milnes, Executive Americas Editor at Vogue Business (right)
Source: Coresight Research

Store Experience: New Opportunities in Luxury

After experiencing the convenience and benefits of online shopping over the past couple of years, consumers’ expectations around the in-store shopping experience are more demanding, even for luxury companies known for their premium experiences. During the “Deep Dive: New Challenges and Opportunities in Luxury” session, Marie Driscoll, Managing Director, Beauty and Luxury, at Coresight Research, presented on today’s luxury consumer. Coresight Research expects the worldwide personal luxury goods market to reach nearly $370 billion by 2025, despite concerns over consumer spending in the face of inflation and macroeconomic uncertainty. To succeed in the years ahead, luxury brands are now offering enhanced in-store experiences, as well as embracing new technologies and entering emerging channels and social spaces, such as the metaverse.

Driscoll during the “Deep Dive: New Challenges and Opportunities in Luxury” session
Source: Coresight Research

Throughout her presentation, Driscoll touched on many of the ways luxury brands around the world are enhancing their store experiences. In the United Arab Emirates (UAE), for example, luxury companies are helping to develop the region’s growing in-person retail ecosystem and leveraging local events, such as the annual Dubai Shopping Festival, to bring customers into enhanced stores.

Following her presentation, Driscoll and various brand leaders enjoyed a lively discussion on how luxury brands can evolve to better meet consumer demand, both online and in-person. Participants in the discussion were:

• Emily Essner, Chief Marketing Officer at Saks
• Sandeep Seth, Global Chief Marketing Officer and President of North America at Coach
• Samina Virk, CEO of North America at Vestiaire Collective

During the conversation, Seth spoke about Coach’s most recent concept store, the Coach Play store in Chicago, which “brings luxury into the physical store.” Seth stated that the store was designed to be inclusive, allowing all customers to engage with Coach products without being intimidated. He also commented that the company had never created a store like Coach Play in a “permanent way.” When thinking about how to create a permanent, engaging store, the company selected a vibrant city like Chicago so it could also bring in elements of the local culture. Essner similarly discussed Saks making its luxury Fifth Avenue flagship store more accessible, stating that it added a Parisian restaurant during its recent “tremendous renovation” at the flagship for this very purpose.

From left to right: Seth, Virk, Essner and Driscoll
Source: Coresight Research

In 2023 and beyond, Coresight Research expects the worldwide luxury industry to evolve in many ways. This year will benefit from China’s retail market opening back up, as many Chinese consumers have pent-up demand for luxury and travel offerings. Meanwhile, in the US, luxury growth will slow as consumers focus their discretionary spending on contending with inflated prices and in-person experiences, such as travel and social engagements—making immersive, engaging store experiences all the more important. We expect to see a mid-single-digit percentage increase in the size of the US luxury market in 2023.

For any brands or retailers, luxury or otherwise, looking to create better store experiences, Coresight Research relaunched its proprietary BEST framework in 2022 to provide companies with a model through which they can achieve retail excellence both online and in-person.

Shopper Engagement: Leveraging Data-Driven Insights

While retailers must provide unique and immersive in-person shopping experiences in-person to capture consumers’ attention and wallets, they must also engage with them outside of the store. Above all else, shopper engagement must be personalized to the customer. In the “Achieving Personalization at Scale” session, Amanda Bopp, VP of North America Marketing at Kate Spade, stated that personalization is important because it shows that companies understand that humans are complex and will not simply reduce their customers down to their preferred shopping categories or channels. Specifically, personalized language is one of the most important parts of a personalization strategy. While two offers might have the same product at the same price point, if their language is personalized and engaging, it can significantly impact how a consumer responds to the offer.

However, while personalization is important, Mike Calvo, Chief Technology Officer at Shipt, warned, “if it feels like personalization, you have done it wrong. If it feels seamless and that the brand or retailer understands you, then you are doing it right.” In order to do things right, Calvo stated that companies must combine high-quality, accurate data with a strong data team that understands complex systems and can find solutions.

From left to right: Bopp from Kate Spade; Calvo from Shipt; David Malloy, VP, Enterprise Marketing and Creative Technology, The Estée Lauder Companies Inc.; Veronika Sonsev, Co-Founder of CommerceNext
Source: Coresight Research

In the “Blending Digital and Physical to Create a Dazzling Customer Experience” session, Beth Gerstein, Founder and CEO of Brilliant Earth, and Melissa Repko, Retail and Consumer Reporter for CNBC, discussed another way to engage with consumers: sustainability initiatives. Gerstein stated that creating a company with some type of social and environmental impact is essential, as it fosters an “emotional purchase.” Today, shoppers, influencers, employees and governments increasingly demand that businesses grow and strengthen their sustainability efforts, seeking transparency, progress and goal reporting. This means that the sustainability practices of consumer-facing industries impact both a firm’s value and its relationships with its customers.

Gerstein also revealed how companies can keep customers engaged between purchases, recommending that brands innovate frequently, engage with consumers on all social media platforms, provide educational content and work with the influencers their audience love.

Repko (left) and Gerstein (right) during the “Blending Digital and Physical to Create a Dazzling Customer Experience” session
Source: Coresight Research

Emerging Channels: The Evolving Retail Landscape

In the current uncertain macroeconomic environment, retailers can turn to new and emerging channels to drive alternative revenue streams. These emerging channels, and their impact on the retail landscape of both today and tomorrow, were a major topic of conversation throughout the third day of Shoptalk 2023.

Discussions began in the morning, during the “Optimizing Between DTC and Wholesale Strategies” session, where all panelists agreed that focusing on just the direct-to-consumer (DTC) channel or the wholesale channel can be “limiting.” Instead, companies need to find a balance between the two. While the wholesale channel allows brands and retailers to scale and interpret product performance data across different regions and segments, the DTC channel provides them with access to first-party data and enables creativity and agility.

To start building wholesale relationships—which are crucial to the wholesale channel—a company must first build up its DTC offerings, creating a brand that wholesalers can believe in, according to Chris Clark, Co-Founder and Chief Digital Officer at Grove Collaborative. However, once that step is completed, companies can begin seeing growth in both channels. Clark believes there is a substantial halo effect from utilizing both channels simultaneously, although he openly admitted that he does not yet have the tools to measure this.

These companies are not alone in their attempts to find harmonious ways to optimize their wholesale and DTC channels. Many brands and retailers, including NIKE and Under Armour, started to reembrace their wholesale partners in 2022—after focusing on the DTC channel during the pandemic—albeit in different ways. Coresight Research expects that many companies will continue to build and rely on a hybrid wholesale-DTC model over the next few years.

The “Optimizing Between DTC and Wholesale Strategies” session, from left to right: Anddria Clack-Rogers Varnado, VP & GM of Consumer Business at Kohler Co.; David J. Katz, EVP and Chief Marketing Officer at Randa Apparel & Accessories; Clark from Grove Collaborative: Sonya Brown, General Partner and Co-Head of Growth Equity at Norwest Venture Partners
Source: Coresight Research

The conversation on emerging channels continued in the “Building Unified Retail Experiences” session later in the morning. There, panelists further discussed the importance of a “unified retail” strategy, as focusing on a single channel no longer reflects how modern consumers shop. Once, consumers simply went to the store and purchased an item; today, they are more likely to look up a product online, consider the purchase, and then possibly complete it weeks later, either in-person or online. As such, all panel members agreed that retailers cannot simply measure channel-specific revenue and base their decisions on that information. Instead, they must measure the total synergy of all channels, creating a unified, omnichannel shopping experience. Doing so will allow companies to meet consumers where they are and help them get to the finish line of final purchase. Similar sentiments arose during the keynote session “Perspectives on the Future of the Industry,” where panelists spoke about shopping becoming an “ambient” activity. The number of ways someone can now shop means shopping surrounds the consumer, making it easier and, in some cases, less intentional.

Day three discussions around emerging channels ended with the “Next-Generation Retail Media Offerings” session in the Apollo Theater. During the conversation, panelists discussed why many organizations prefer retail media to traditional media. The top two reasons were that retail media networks (RMNs) can reach target segments of category consumers—no matter the size of that segment—and provide first-party data. In turn, that first-party data can improve targeting even more, further enhancing the effectiveness of RMNs.

Following the pandemic-driven rise in e-commerce, retail media is emerging as a promising advertising opportunity. In addition to the benefits mentioned above, it also allows retailers to develop closer ties with suppliers and monetize the traffic already coming to their branded e-commerce sites and apps. Crucially, retail media offers higher margins than retailers’ core retail businesses.

The “Next-Gen” session; from left to right: Seth Dallaire, EVP and Chief Revenue Officer at Walmart US; Juan Camilo Gomez, Global Head of Connected Commerce Acceleration at Church & Dwight; Francesca Hahn, VP of Digital Commerce at Mondelēz International; Stephen Mewborn, Partner at Bain & Company
Source: Coresight Research

Organizational Changes: Tech-Enabled Workers

Making structural and organizational changes is crucial for retailers to remain competitive in an uncertain and challenging macroeconomic environment. During the keynote session “The Retail Zeitgeist: Shoptalk’s Take on the Four Biggest Trends Transforming the Industry,” Krystina Gustafson, SVP of Content at Shoptalk, and Joe Laszlo, VP of Content at Shoptalk, took a big-picture view of the trends that will change the retail industry in the years to come, including many of the topics covered above.

One of the four trends covered during the panel was companies’ current initiatives to better the experience of front-line workers, as retail workers are 40% more likely to quit their jobs than workers in other industries, according to the panel. Therefore, many brands and retailers are implementing tech-based changes to enhance working conditions, including:

• Adding flexibility to the front-line employee journey by advancing scheduling and training technology
• Empowering store workers with emerging technology and data via tablets and similar devices
• Creating new opportunities through technology initiatives

In a time when labor shortages pose a severe headwind, the panel reminded brands and retailers that they must transform and foster better employee relationships and experiences.

Gustafson and Laszlo during the “The Retail: Shoptalk’s Take on the Four Biggest Trends Transforming the Industry” session
Source: Shoptalk